2018 Budget hikes CKD car prices in India

Saturday 03 February 2018, 14:39 PM by Nikhil Puthran

Prospective luxury car buyers in the country will soon be shelling out extra from their pockets as the Budget 2018 stipulates hike in taxation on locally assembled and imported cars. The original budget proposal proposed 60 per cent custom duty on Completely Knocked Down (CKD) imports as against ten per cent which is currently being paid. Under fresh revisions, customs duty on imported engine components has been raised from 10 to 15 per cent, along with hike in the duty on the vehicle parts from 10 to 15 per cent.

Owing to fresh revision in taxation for CKD units, car buyers in the country are likely to witness an increase in cost between three to five per cent. The move will affect all major car manufacturers such as Mercedes-Benz, Audi, BMW and the JaguarLand Rover which have their assembly facilities in India. However, the move will support government’s plan to promote local sourcing and support the make in India initiative.

Leading luxury car manufacturers in India like Audi and Mercedes-Benz have expressed disappointment and believe that it will restrict the growth of luxury car industry in India. Moreover, cars which have arrived as completely built up (CBU) or are fully-imported will also cost more. Reports indicate that one section of the customs duty on CBUs might be increased to 25 per cent from the current 20 per cent. This could affect the total import duty which is already heavy and over 180 per cent.